Bell Atlantic-GTE $67.4B deal approved by four of five FCC commissioners

NEW YORK (CNNfn) - The Federal Communications Commission is poised to approve Bell Atlantic Corp.'s proposed $67.4 billion acquisition of GTE Corp., sources familiar with the transaction confirmed Thursday, removing the final roadblock impeding the creation of the largest U.S. local telephone company.

Sources told CNNfn that four of the five FCC commissioners have agreed to approve the deal with certain conditions, but cautioned that a formal vote by the board has yet to be taken. The FCC said as of mid-morning no announcements related to the deal were scheduled for Thursday.

The main sticking point thus far in the negotiations with the FCC has been the future of GTE's Internet unit, Genuity Inc., which the Irving, Texas-based company agreed in April to spin off. Genuity handles a massive amount of Internet traffic that moves across GTE's lines, which for regulatory purposes is considered long-distance service -- something Bell Atlantic is not permitted to offer without FCC approval.

The FCC has been wary of awarding such privileges until Bell Atlantic proves its local markets are also open to competition. Late last year, the New York-based company won FCC approval to sell long-distance services in its home state, becoming the first regional carrier to gain such approval.

Representatives from both GTE and Bell Atlantic declined to comment on the possible FCC approval, saying they had not yet received any official word from the federal agency. The companies are still planning to close their merger by the end of June following the Genuity offering, which could raise in excess of $2.3 billion.

The merger will create an unparalleled local telephone powerhouse with more than 63 million local access lines in 38 states across the country, narrowly trumping the current No.1 local provider, SBC Communications, which boasts 61 million access lines.

The combined company, to be named Verizon, will rank as the No. 2 U.S. telecom company behind AT&T Corp. and feature the nation's top wireless operation, Verizon Wireless, which includes the wireless assets from Vodafone AirTouch. Verizon Wireless will reach 90 percent of the U.S. population and 96 of the 100 largest wireless markets in the country.

The approval comes more than a year after the U.S. Department of Justice gave its regulatory thumbs-up to the deal and nearly two years after the merger was first announced in July 1998. The DOJ required the two companies to sell overlapping wireless operations in nine states.

The merger was originally valued at $52.8 billion, but Bell Atlantic's stock has climbed more than 27 percent since the deal was announced.